Insurance Regulation Chap 2 Exam

Domestic insurers may invest their assets in all of the following EXCEPT: A) obligations of the U.S. Postal Service. B) savings and loan association accounts. C) veterans' loans. D) obligations of any European country.

D

Which of the following acts helps assure confidential, fair, and accurate reporting of consumer information? A) Unfair Trade Practices Act. B) McCarran-Ferguson Act. C) Disclosure Act. D) Fair Credit Reporting Act.

D

All the following are duties of the Commissioner EXCEPT: A) drafting and enacting insurance laws. B) implementing rules and regulations. C) enforcing insurance laws and regulations. D) examining domestic insurers.

A

An insurer who terminates a producer's appointment must inform the commissioner within how many days? A) 60 days. B) 30 days. C) 15 days. D) 45 days.

30

When does a notice of appointment expire? A) When the appointee files a notice of cancellation. B) January 1 of each year. C) On the agent's 65th birthday. D) On the license anniversary date each year.

A A notice of appointment is valid until canceled, or until the insurance company or agent files a notice of termination.

Suppose an insurance producer writes a majority of insurance business on the employees and officers of the business owned by the agent's spouse. This kind of business is defined as a: A) controlled business. B) limited partnership coverage. C) family business. D) closely-held insurance.

A In general, controlled business is an insurance account that an agent or broker can control by virtue of his or her influence with the buyer, as contrasted with controlling by actual agreement. Controlled business includes insurance written in the interest of the licensee's self, immediate family, employer or any corporation or association in which the licensee or a family member is an officer, director or substantial stockholder.

Which of the following statements about using the state's guaranty association is CORRECT? A) It is a violation of any state's insurance code to use the association's existence as an endorsement for a particular policy. B) The guaranty associations produce their own advertisements to inform consumers which policies are covered by the associations and which are not. C) Producers may refer to the state guaranty association when they solicit insurance. D) Insurers, and not producers, may use the existence of a state guaranty association when selling insurance.

A No person, including an insurer or producer, may make any statement, written or oral, that uses the existence of the state's life and health insurance guaranty association to sell or induce the purchase of any form of insurance covered by the association.

National Association of Insurance Commissioners (NAIC) does all of the following EXCEPT: A) preserve state rather than federal regulation of the insurance industry. B) prosecute and punish criminal violators in the insurance industry. C) promote uniformity in state insurance laws and regulations. D) promote efficient administration of insurance laws and regulations.

B

Who investigates, settles, and reports claims arising under insurance contracts? A) Subagent. B) Adjuster. C) Counselor. D) Agent.

B Insurance adjusters are compensated to investigate, settle, and report about insurance claims arising under insurance contracts.

Assume an agent stresses the following points in a sales interview while recommending a participating 30-pay life policy to a 37-year-old prospect. Which of the following statements constitutes misrepresentation? A) The policy's cash value will build at a faster rate than that in a straight life policy. B) The policy endows in 30 years. C) The policy will be fully paid up in 30 years. D) Dividends are not guaranteed for the future.

B Cash value will not equal face amount it just simply paid up.

An applicant for an insurance license must meet all of the following qualifications EXCEPT: A) pass the licensing examination. B) pay the application fee. C) be a U.S. citizen. D) be at least 18 years old.

C

When conducting examinations, the Commissioner of Insurance can do all of the following EXCEPT: A) require the production of records, books, papers, and any other relevant documents. B) subpoena witnesses. C) require parties to appear only in person. D) administer oaths.

C

If an insurance producer violates any section of the insurance code, what can the Commissioner issue to stop the producer from committing the violation? A) Cease and desist order. B) Notice of violation. C) Suspension order. D) Notice of a hearing.

Cease and Desist Order To prevent someone from continuing to violate the insurance laws of the state, the Commissioner can issue a cease and desist order requiring the person to stop the illegal activity immediately.

National Association of Insurance

Commissioners

Controlled business is insurance sold to cover the lives, businesses, properties, or risks of all the following EXCEPT: A) an employer of the insurance producer. B) the insurance producer. C) the spouse of the insurance producer. D) a friend of the insurance producer.

D Controlled business is insurance written on the producer, the producer's spouse or the producer's employer.

All of the following people may be granted a temporary producer license EXCEPT: A) the designee of a licensed producer who is entering active service in the U.S. Armed Forces for a significant period of time. B) an employee of a licensed producer who has become disabled. C) the widow of a deceased producer. D) the spouse of a licensed producer who has moved out of state.

D The spouse of a licensed producer may be granted a temporary producer license if the producer dies or becomes disabled but not because the producer has moved out of state.

In the sales presentation, which of the following should the producer definitely NOT do? A) Insist on conducting a fact-finding interview, even though the client knows what she wants. B) Strongly recommend a policy that the producer feels is right for the client, even though the client may not agree. C) Ask questions about the client's personal life. D) Send all disclosure documents by mail after the sale.

D Disclosures must be given at the time of the sale

The practice of using a misrepresentation to induce any person to lapse, forfeit, surrender, exchange, or convert an insurance policy is also known as: A) coercion. B) unfair discrimination. C) twisting. D) rebating.

Twisting Twisting is the illegal practice of using a misrepresentation or incomplete comparison to convince a person to lapse, forfeit, surrender, exchange, or convert an insurance policy in order to purchase a similar policy from the selling producer.

When appropriate, the Commissioner reports a violation of insurance law to the: A) local police chief. B) county sheriff. C) attorney general. D) state police.

attorney general